Most taxpaying individuals do not realize just how many options there are to pay your taxes. Not only are there a plethora of options to pay your taxes before the due date of April 15th but there are also options for those that need a payment plan or even a short additional extension to pay your taxes. Let this article be your guide in discovering your best option for your personal situation.
Paying before the Deadline
There are number of options to choose from when paying your taxes before April 15th that include direct pay, online payments, third-party payment services and traditional payment methods. Find the one that best suits your personal situation below.
Direct Bank Pay
Paying directly from your checking or savings accounts is easy with the IRS Direct Pay option. With just five simple steps you can have your tax bill paid and receive instant confirmation that it was submitted. In order to use Direct Pay, you will need a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) on hand. The first step includes providing your tax information, while the second step verifies your identity. During the third step you simply enter your payment information such as account number and bank transit number while in the fourth step you review the transaction and electronically sign for the payment. The last step simply prints and confirms your online payment; a simple process that takes only minutes.
Electronic Federal Tax Payment System
Unlike the direct pay option, which does not keep your payment information on file making you enter the information every year, the EFTPS is a payment system with an online account that allows you to track payments, schedule payments in advance and make instant payments after enrollment. This system allows you to make payments 24 hours day seven days a week, with convenience and flexibility for both individuals and businesses. The system even allows you to make federal tax payments, income tax payments, employment and excise tax payments. After the enrollment process you will not need to enter payment information again unless it changes.
Other long-standing traditional payment methods are also available and include electronic funds withdrawal if you are e-filing, a same day wire transfer payment from your financial institution, or sending a check or money order directly to the IRS payment office closest to you. Credit and debit payments through recognized IRS service providers are also available with additional fees.
Paying Later than the Deadline
If you are unable to pay your taxes by the deadline of April 15th, there are two other options you may qualify for.
Online Payment Agreement
Eligibility requirements for an online payment agreement requires that individuals owe less than $50,000 including all fees, penalties and interest and that all returns have been filed. For businesses the total amount owing must not be more than $25,000 with the same conditions as above. The second step of the process is ensuring that all of your information including your recent letter of assessment, financial information, and the highest amount that you will be able to pay and when it can be paid is correct. The last step of the agreement is the approval process by the IRS and setting up of the agreement which will also include fees ranging from $43 to $120.
Offer in Compromise
Very rarely, certain individuals may qualify for reduced tax payments based on a strict set of requirements as set out by the IRS. Factors that determine the eligibility for a lower payment include your ability to pay, income and expenses and any asset equity you may have.
These are the different ways that you can pay your taxes both before and after the April 15th deadline.